Cash-Only Doctors Abandon the Insurance System

June 21, 2013

Fed up with declining payments and rising red tape, a small but growing number of doctors are opting out of the insurance system completely. They're expecting patients to pony up with cash. Some doctors who have gone this route love it, saying they can spend more time with and provide higher quality care to their patients. Health advocates are skeptical, worrying that only the wealthy will benefit from this system, says CNN Money.

Under the traditional health insurance system, a large staff was required just to navigate all the paperwork. That resulted in high overhead, forcing doctors to take on more patients to cover costs. In Wichita, Kan., 32-year-old family physician Doug Nunamaker switched to a cash-only basis in 2010 after taking insurance for five years.

Nunamaker and his partner set up a membership-based practice called Atlas M.D. -- a nod to free-market champion Ayn Rand's book Atlas Shrugged.

Under the membership plan (also known as "concierge" medicine) each patient pays a flat monthly fee to have unlimited access to the doctors and any service they can provide in the office, such as EKGs or stitches.

The fee varies depending on age. For kids, it's $10 a month. For adults up to age 44, it's $50 a month. Senior citizens pay $100.

The office has negotiated deals for services outside the office. Nunamaker says he can get a cholesterol test done for $3, versus the $90 the lab company he works with once billed to insurance carriers. An MRI can be had for $400, compared to a typical billed rate of $2,000 or more.

Nunamaker encourages his patients to carry some type of high-deductible health insurance plan in case of an emergency or serious illness. But for the everyday stuff, he says his plan works better for both doctor and patient.

Nunamaker now has a patient list totaling 400 to 600, compared to the 2,500 to 4,000 he says a typical family physician usually maintains. And he's quite happy with his annual salary of around $200,000.

It's believed that only a small number of doctors have switched to a cash-only model. The American Academy of Family Physicians says about 4 percent of respondents to a 2012 survey reported taking only cash, up from 3 percent in 2010. A Medscape survey found 6 percent of physicians in the cash-only business in 2013, up from 4 percent in 2012. Most are primary care doctors, though not all.